Card issuance growth Chinese banks increased credit card issuance in 2008
Chinese banks issued 300.4 million new cards in 2008, of which 142.3 million were credit cards, according to data from the central bank, the People’s Bank of China (PBoC). The growth rate for credit card issuance was 57.7 percent higher than in 2007. Also, the PBoC stated that there are now 640 million records now stored in the country’s credit database, up 40 million from 2007.
Bank card transactions reached CNY127.2 trillion ($18.6 trillion), up 14.1 percent from 2007, while the number of POS terminals and ATMs increased by 663,900 and 39,900 respectively to total 1.85 million and 167,500.
Separately, China’s credit card delinquency rate, measuring card debt that is more than 60 days late, remained at 2 percent, according to data from the China Banking Regulatory Commission. However, the Commission recommended that new rules be established regarding credit card charge-offs, which are currently dealt with in the same way as bad loan write-offs.
Card acceptance Taiwan urged to accept Chinese credit cards
Merchants in Taiwan are urging the government to allow the use of credit cards issued by Chinese banks in order to encourage spending by Chinese tourists visiting Taiwan. The number of Chinese tourists visiting Taiwan has risen rapidly since the beginning of the year following the removal of some travel restrictions, but Taiwanese merchants claim that spending has not risen as China UnionPay cards are not accepted in Taiwan.
According to merchants, China UnionPay cards charge less for currency exchange fees and surcharges on foreign transactions, making them more popular than Visa or MasterCard-branded cards. China UnionPay cards are not accepted in Taiwan because there is no clearance and settlement mechanism for credit cards between Taiwan and China, making it impossible for Taiwan banks to cover charges made on China UnionPay cards.
Taiwan’s Mainland Affairs Council claims that the issue is purely a technical one and that Taiwan and China may sign a memorandum of understanding in the future to enable acceptance.
Product launches Citibank launches premium credit card in South Korea
Citibank Korea has launched the Citi PremierMiles credit card, a premium mileage and travel card which leverages Citi’s partnerships with several airlines around the world. The card is a Visa Signature-branded card, the latest offering in Visa’s premium card range aimed at high net worth customers, and offers high-end travel-related rewards.
Customers can accumulate loyalty points, known as PremierMiles which have no expiry date, for daily spending and can also convert earned PremierMiles into different frequent flyer programmes, or alternatively receive cashback.
The card will be available in two versions: PremierMiles Asiana and PremierMiles Korean Air. Citi PremierMiles cardholders will receive an accumulation rate of one PremierMile for every KRW1,000 ($0.70) in retail spending on their cards.
Cardholders will also receive a first-year activation bonus of 5,000 PremierMiles, as well as an annual spending bonus of 5,000 PremierMiles for spending between KRW20 million and KRW40 million per year, 8,000 PremierMiles for spending over KRW40 million per year, and 50,000 PremierMiles for spending over KRW100 million per year.
Customers may continue accumulating Citi PremierMiles and keep them centralised until they wish to convert them into frequent flyer programme miles. The annual fee for the PremierMiles Card is KRW120,000. The product has already been introduced in several markets in the Asia-Pacific region, including Singapore, the Philippines, Hong Kong, and Taiwan.
Partnership strategy Standard Chartered partners with Vietnam’s ACB for credit card launch and ATM sharing
Standard Chartered Bank and Asia Commercial Bank (ACB), have teamed up to issue a co-branded credit card and open up their ATM networks in Vietnam to allow customers of each bank free access to both banks’ ATMs, which combined number around 270 across Vietnam.
ACB, one of the largest commercial banks in Vietnam, will issue Visa-branded gold cards that can also be used at Standard Chartered ATMs, merchants, and other transaction points around the world.
Standard Chartered has held a stake in ACB since 2005, identifying Vietnam as a key growth market, and gained a licence to incorporate its Vietnam unit in April 2008.
In March 2009, the World Bank said that Vietnam’s economic growth would slow to 5.5 percent this year, having initially forecast a growth rate of 6.5 percent in November 2008. Vietnam’s economy grew 6.23 percent in 2008.
ATM strategy India’s ICICI Bank mulling ATM spin-off
ICICI Bank, India’s largest commercial bank by assets, is considering spinning off its ATMs and POS terminal networks. The bank is seeking bids from technology companies and private equity companies to participate in a new entity that will manage the business. According to press reports, payment network Visa, payment processors TSYS and First Data, and a joint venture between private equity player Blackstone and CMS Computers have shown interest in partnering with the bank.
ICICI Bank has around 4,000 ATMs and over 200,000 POS terminals across India. The rationale for the move is believed to be an industry consensus that separate units which can specialise in installing and managing ATMs will be able to deploy new ATMs and improve overall efficiency. Should the initiative prove successful, it could lead to similar outsourcing initiatives from other Indian banks.
Debit cards Kiwibank launches Visa debit card
Kiwibank is to become the second bank in New Zealand after Westpac to offer a Visa debit card. Kiwibank will charge a A$10 ($6.95) annual fee for the card.
According to Visa, 53 percent of Visa cards globally are debit cards, and banks in the country are planning to roll out Visa debit cards in the next few months as consumers in the country are more favourable towards cards that can be used internationally. The national debit card system, EFTPOS, is for domestic use only. Issuers are also hoping to capitalise on the shift away from credit card usage.
According to the Reserve Bank of New Zealand, credit card outstanding balances grew by just 4.2 percent in January 2009, compared to 7.1 percent in the year-ago period.
EUROPE, MIDDLE EAST, AFRICA
Contactless payment S2P joins forces with Oberthur Technologies
French data security firm Oberthur Technologies is to supply S2P, the banking subsidiary of global hypermarket chain Carrefour, with contactless payment cards.
The Chrysalis Fly dual interface payment card will be used by S2P as part of its “Universal Payment Card” project, the first of its kind in France and one of the largest contactless projects in Europe. The card combines the security of an EMV chip interface with contactless applications, offering an accelerated transaction time of up to twice the speed of other payment cards.
“Contactless cards represent the future of the payment card,” said Eric Duforest, managing director of Europe for the card systems division at Oberthur Technologies. “With millions of contactless cards already delivered, and the launch of innovative contactless projects like S2P, Oberthur Technologies has confirmed its leadership in this strategic market.”
Mobile payments Monitise and Made in Africa launch mobile money network
Mobile banking specialist Monitise has announced a joint venture with Made in Africa, the organisation which is helping drive East African economic growth, to provide mobile banking in Uganda.
The new company, Monitise East Africa, is structured as a 50/50 joint venture between Monitise and Made in Africa and has already been awarded $1.5 million by the Africa Enterprise Challenge Fund, which is part-funded by the UK’s Department for International Development (DFID), to help roll out the service. The venture will attempt to create a mobile money ‘ecosystem’ across the region, by bringing together multiple banks, mobile operators and service providers to deliver services that meet the needs of all consumers, both banked and unbanked, while still giving them a choice of mobile operator and financial provider.
Chris Cleverly, director and founder of Made in Africa, said: “It has been clear for some time that the lack of access to financial services has inhibited social and financial mobility across the region.
“Monitise’s mobile money services in the UK and North America have already demonstrated that the ecosystem model has the potential to bring together banks, operators and service providers to roll out a service that benefits the mass-market of consumers.”
Services will include account management, money transfers to other people and payments to merchants or service providers. The service will launch initially in Uganda, followed by Rwanda, Tanzania, Burundi, Democratic Republic of Congo, Ethiopia, Kenya and Zambia.
Fraud 2008 fraud figures announced by APACS
Card identity theft in the UK has risen by almost 40 percent, according to a survey released by UK payments association APACS.
The report reveals card identify theft has risen from £34.1 million ($49.7 million) in 2007 to £47.4 million by the end of 2008. Online banking fraud losses were also up; 132 percent compared to last year, while fraud on lost or stolen cards actually fell by 4 percent, from £56.2 million to £54.1 million, possibly as a result of the widespread introduction of the chip and PIN security measure.
The two main areas of fraud were on transactions not protected by chip and PIN: specifically internet, phone and mail order fraud, or card-not-present fraud; and fraud abroad – committed by criminals using stolen UK card details in countries yet to upgrade to chip and PIN – which has nearly doubled in two years.
Product launch Elite Infinite card launched for first time in Africa
Nigeria’s sixth-largest bank, Access Bank, has launched the first ever Visa Infinite credit card in the African market.
The Black card is offered by invitation only and is the highest in the range of Visa card products in the African market, targeted at a select group of high net worth individuals such as CEOs of large corporations, entrepreneurs and businessmen.
The card offers services such as ticket exchange, concierge service, airport lounge access, purchase protection, emergency medical and legal referral and collision damage waiver. Further services include emergency transportation assistance and bespoke special event invitation.
Prepaid cards Ajman Bank to market e-Dirham cards in UAE
Ajman Bank of the United Arab Emirates (UAE) has signed a deal with the Ministry of Finance of the Ajman emirate to market and sell e-Dirham prepaid cards in Ajman.
Ajman Bank, an Islamic commercial bank that officially launched operations in February 2009, will offer the cards to public and private sector clients, facilitating payments and revenue collection through the Ministry of Finance’s central network.
The UAE-wide e-Dirham system was launched in 2001, replacing previous revenue collection systems such as governmental stamps or receipts, and eliminating the need for direct cash handling.
Contactless payments MasterCard issues 50 millionth PayPass device
Payment network MasterCard revealed it issued its 50 millionth PayPass device at the end of 2008, a doubling of the amount of contactless devices in circulation in just 12 months.
MasterCard claims strong support for the technology, with a benchmark survey conducted last year finding that 77 percent of consumers with a PayPass-enabled card use it as their primary form of payment.
Cathleen Conforti, global PayPass product manager at MasterCard Worldwide, said: “PayPass is the payment innovation that is displacing cash while making transactions faster, easier and more secure in a way that creates a more efficient system of global commerce for consumers, merchants and financial institutions.”
Card processing Lloyds TSB Middle East in partnership with Network International
Lloyds TSB Middle East, part of Lloyds Banking Group of the UK, is to use Network International of the United Arab Emirates (UAE) to provide its card processing services. Network International, the UAE’s largest third-party processing vendor, will provide Lloyds TSB Middle East with smart chip-certified solutions as Lloyds TSB Middle East migrates to chip and PIN functionality for all cards.
In addition, Lloyds TSB Middle East customers will be able to use EmiratesNBD and Emirates Islamic Bank ATMs for free, as well as the existing network of Lloyds TSB Middle East ATMs.
Prepaid cards Prepaid joint venture established in Peru
Latin American prepaid card service provider and programme manager NovoPayment has established a joint venture with Peruvian industry conglomerate Interbank Group to develop prepaid card programmes nationally, including prepaid electronic benefit transfer (EBT) schemes and food vouchers, general-purpose reloadable cards, cash management and remittances products.
The venture, named Tebca Peru, will initially launch a prepaid food voucher programme under the brand Provis Alimentación, aimed at electronically managing social benefit payments for companies and entities throughout the country. The company expects to issue as many as 200,000 cards in the first two years.
“We are very pleased to be partnering with such a prestigious, innovative group and to lead the development of this important payment category,” said Anabel Perez, co-founder and CEO of NovoPayment. “Prepaid technology will significantly lower distribution and administrative costs, simplifying management for local private and public organisations, and providing end users with access to modern tools that facilitate their management of cash and benefits.”
NovoPayment’s portfolio includes more than 960,000 branded active cards, representing more than 30 million transactions and approximately $600 million annually.
ATM deployment Chile’s BCI to install 300 new ATMs in 2009
Chilean bank BCI plans to install around 300 new ATMs during 2009, having closed 2008 with 998 ATMs in operation. BCI is expanding its ATM network, having identified the channel as a tool to improve customer service and which helps to reduce costs. BCI is expanding the ATM network to include multi-functional machines that can perform functions beyond cash dispensement.
Ratings upgrade S&P raises credit rating for Unibanco
Credit ratings agency Standard & Poor’s has raised its long-term ratings on Brazil’s Unibanco to ‘BBB’ from ‘BBB-’, and removed the ratings from CreditWatch, where they had been placed with positive implications in November 2008. The short-term counterparty credit rating was affirmed at ‘A-3’.
S&P said the upgrade reflects the equalisation of ratings on Unibanco with those on Banco Itaú(BBB/Stable/A-3) after the Brazilian Central Bank formally approved the merger of the two banks. Itaú and Unibanco have begun integrating their operations and defining a new organisational structure and key personnel.
The ‘BBB’ rating reflects the consolidated bank’s dominant market position in the Brazilian banking industry and the benefits of significant scale gains and the strengthening of its retail franchise, which support access to more stable sources of funding and a diversified revenue mix. S&P said that these factors should help the newly-merged entity weather the risks of challenging economic conditions facing the Brazilian and global banking industries in 2009.
Security and fraud HSBC Bank Paraguay goes online
HSBC Bank in Paraguay has rolled out Digipass technology and Vacman Controller authentication software from software security specialist Vasco Data Security International for its retail and corporate customers.
HSBC Bank Paraguay is the first bank in the country to offer both its retail and corporate online customers two-factor authentication and is the only bank in Paraguay to roll out Digipass 2-factor authentication devices for retail customers. Digipass allows HSBC’s customers to securely log on to the bank’s e-banking application to consult their account information, make money transfers and manage their banking accounts online.
Business cards Mexico’s Banamex launches business credit card
Citigroup’s Mexican unit Banamex has launched the ‘Business Drive’ credit card, aimed at small and medium-sized enterprises (SMEs) in the country. The card includes insurance against fraud, and additional cards can be obtained with an individual limit per related card and separate statements of activity. A loyalty programme is also on offer, with discounts available at around 1,500 locations around the country. Banamex is aiming to double financing to the SME sector in Mexico in 2009 to amount to MXP23 billion ($1.6 billion) by the end of the year.
Separately, Banamex has launched a restriction-free programme, ‘Tasa Baja Banamex’, for current and prospective Banamex cardholders in Mexico. Different plans are available to suit various types of customers. Tasa Baja Banamex will provide personalised payment schemes to suit cardholders’ needs, based on a detailed analysis of cardholder behaviour. To date, Banamex has a total of 7 million cardholders.
Product launch US Bank offers Air Miles in Mexico
US Bank, North America’s sixth-largest commercial bank, has joined with Mexico’s largest airline AeroMexico in a new credit card venture designed to provide customers with travel rewards as they spend.
The cards, AeroMexico Visa and AeroMexico Visa Signature, offer customers the opportunity to earn AeroMexico Club Premier Miles with all their purchases. The cards are aimed at both residents and business travellers making frequent trips to Mexico.
AeroMexico Visa Signature cardholders will be rewarded with 20,000 bonus miles upon enrolment, while both cards receive a companion ticket as well as discounted airfare purchases and double miles on AeroMexico tickets purchased using the card.
Pat Coll, executive vice-president of US Bank Retail Payment Solutions, said: “With US Bank’s experience as a leading credit card issuer and AeroMexico’s status as the largest airline in Mexico, this partnership is an ideal match. The new AeroMexico Visa card brings the airline’s mileage rewards programme to a new US-based audience with significant growth opportunities in key markets.”
Bank profitability Brazilian margins rise as lending rate falls
Brazilian banks are likely to see a rise in net interest margins as the central bank’s overnight lending rate (SELIC) drops, according to analysts at Swiss financial services provider Credit Suisse.
SELIC is expected to drop to 9.25 percent by the end of 2009, following the largest reduction in five years as it fell to 11.25 percent in March.
As the banks’ rate-linked liabilities outweigh their rate-linked assets, a drop in the borrowing rate will have a positive effect on some of Brazil’s largest financial institutions including Banco do Brasil, Uniao de Bancos Brasileiros, Banco Bradesco and the newly formed Itaú Unibanco Holding.
According to Credit Suisse, net interest margins in 2009 will likely increase by an average of 60 basis points, or 0.6 percentage point, from the fourth quarter.
Online banking More US adults turning to e-banking
Nearly half of all US adults who use the internet also actively use online banking to conduct most, if not all of their banking, up from 23 percent in early 2007 to 49 percent today, according to a survey by HSBC.
Online banking usage was as high as 62 percent among the 21- to 34-year-old age group, and stood at 40 percent for those aged between 45 and 69.
“People are increasingly turning to internet banking because of the increased convenience, independence and typically better value that it offers,” said Kevin Martin, executive vice-president of personal financial services at HSBC Bank USA.
In separate research done by research consultancy Forrester, the number of US households banking online by 2011 could rise to 92 million, or 76 percent of US households.
These results run contrary to a study by comScore that recorded a fall in banking sites’ traffic in the third quarter of 2008, with a fall of 12 percent for Wachovia and eight percent for JPMorgan Chase.
Alternative payments PayPal in loyalty and m-banking launch
Online payment platform PayPal is launching into two big ventures – interoperability across payment platforms for smart cards, and a loyalty programme in collaboration with its owner, eBay.
The card-free online payment processor has become a member of GlobalPlatform, an international specification body for smart card infrastructure.
PayPal will become a participating member and a significant stakeholder in GlobalPlatform’s task force, sharing its own best practice and technical knowledge in the payments field with other members from the global online and mobile payments industry.
“The latest amendment to our specifications aims to align smart card technology with web services.” said Kevin Gillick, executive director of GlobalPlatform,
“As such, we welcome PayPal as a world leader in web-enabled payments and look forward to its valued input that, alongside the work of other members, will help us achieve our priorities in 2009 and beyond.”
eBay is also conducting a survey among PayPal users as it is considering setting up a loyalty programme for its top buyers among avid PayPal users.
Consumer indebtedness US credit card defaults hit 20 year-high
US credit card issuers are seeing the worst levels of defaults in the last 20 years.
The news comes as the US Labour Department announced that unemployment had soared to a 25-year high.
American Express – the largest issuer by sales volume – said its net charge-off rate in February rose to 8.7 percent from 8.3 percent in January.
Citigroup saw a worse than expected default rate rise to 9.33 percent from 6.95 percent in the same period. Capital One and JPMorgan Chase, while both reporting bigger credit card losses, still performed better than analysts predicted.
Capital One reported an increase in both delinquencies and charge-offs and said its charge-off rate rose to 8.06 percent in February from 7.82 percent in January. The rate of card loans at least 30 days delinquent also increased to 5.1 percent from 5.02 percent.
However, Capital One said that its US default rate was below American Express’ 8.29 percent in January but above JPMorgan Chase’s 6.35 percent in February.
To combat the rising tide of defaults, banks are increasingly hiking fees and charges to make up lost margins.
This is expected to boost income on penalty fees to $20.5 billion this year from $19 billion last year.
Product launch New cashback card available for Canadians
Scotiabank is to offer Canadian credit cardholders an inducement of 2 percent cashback on their daily purchases with the recently launched Scotia Momentum Visa credit card.
The incentive comes after a survey by the Canadian Bankers’ Association (CBA) revealed loyalty programmes could induce credit-averse Canadians to use their credit cards more often.
Nearly half (48 percent) of those surveyed said they would use credit cards more if they were awarded a 2 percent cash rebate on daily purchases – which is exactly what the bank is offering.
The CBA said that 73 percent of Canadians do not carry a balance and so do not pay interest charges, while a third who do carry a balance pay up before interest charges start racking up.
Marketing Online Citi card bills to begin carrying ads
Citibank has launched an affiliate marketing programme with merchants who will pay the bank a commission based on how many people they refer to their online retail offers.
There will also be an element of direct marketing at play where a customer, who may have visited a spa for example, may see an online offer for a luxury cut-price bath.
The statement ads are targeted based on merchant or product category, and may be also based on the customer’s payment history.
On board are merchants like Sony who offer merchant discounts or promotions and supplemental financial services offerings either directly or through affiliate marketing programmes with other retail partners. The ad format in its online form is called “onsert” – a play on “insert” which is standard promotional material sent with paper bills.
Prepaid cards US Treasury selects JPMorgan Chase for debit card programme
The US Department of the Treasury’s Financial Management Service (FMS) has renewed its designation of JPMorgan Chase as its financial agent to support FMS’s US debit card programme, which provides prepaid debit card services to federal agencies. The three-year contract is part of the Treasury Department’s strategic plan to reduce the number of paper cheques issued by the federal government.
Two types of debit cards will be offered: single deposit cards and multiple deposit cards. Single deposit cards can be used by agencies to pay a cardholder an incentive, bonus, one-time stipend, per diem or other similar one-time payment type.
Multiple deposit cards can be used by agencies to make multiple payments to a debit card for emergencies, stipends, payroll, certain types of benefits or other similar recurring payment types. Both types of cards can be used at point of sale for purchases or at ATMs to withdraw cash.
Cardholders also will have the ability to pay bills via a secure website or to transfer money from the card to another account via an interactive voice response system.